Wednesday, 6 October 2010

The decline of Matchless/AJS motorcycles, Woolwich

The decline of Matchless/AJS motorcycles and the rise of Hondaby Dave Ramsey

My paternal families the Ramseys and the Terrells have lived and prospered in Woolwich and Plumstead since the early 1800s. In a blue collar sense they derived prosperity from the innovative factories of the area and lived in a variety of pleasant rented Victorian terraced houses.

My father worked in the heavy gun factory at Woolwich Arsenal but my parents kept me on at grammar school, which he could ill afford, because they saw that poor management and underinvestment was leading to industrial decline. I can remember dad’s prophetic advice that the government was going to let the gun factory demise and that I should decline any job offers there. He evidenced this by showing me one of the huge lathe machines with its instruction typed into the metal in Cyrillic Russian. It had been destined for the Tsar’s Russia but the revolution changed its location to Woolwich and the piece of antiquarian interest was still the mainstay of production 45 years later. This was fairly typical of the lack of investment in riparian Woolwich factories from where 70000 jobs were lost between 1965 and 1975.

The Matchless AJS motorcycle factory was of interest to me because I passed it most days to go to school. The father of a friend worked there as a skilled project engineer and his Triumph Tiger was refurbished there during lunch breaks. The lack of management control, the boredom and lack of creative expression amongst the workforce speaks volumes about the underlying management problems that appeared in the early 1960s.

A look at the two photos below shows the differences of both of scale, industrial organisation and investment. It also shows the company director astride a motor bike touring the factory talking and smiling with the workers.

Soichiro Honda had invested time in his personal development as an engineer, taking up technical college to develop better piston rings, and also showing skill in identifying essential management talents he lacked but in appointing talent to fill the gap. His 1949 appointment of Takeo Fujisawa as managing director was one of these. Honda recognised that the collapse of the market in 1953 after the end of the Korean War. He identified that working people needed a cheap way to get to work and produced the Cub clip on engine for cycles to ensure Honda’s survival, by generating cash flow and keeping the skilled workforce together.

In 1956 the Norton Range consisted of a 500cc and 600cc dominator machines. They were designed in 1948 by Bert Hopwood, Norton MD from 1958, who recognised his signature on the production drawing in the 1956 production line. It had been stopped to allow for manufacturing improvements to the cams but they clearly had not been made. The loss of these production years represented profits forgone.

Alec Skinner, the finance director at Norton, devised a sound but simple early warning system at Norton, as a bank overdraft facility was not available to them. Skinner produced finance, production, labour and stock control figures for the Board and production unit alike. Alec’s simple little sheet of paper gave management all the necessary information to make the right decisions.

The AMC board at Woolwich introduced a complex and unsuitable cost control system, possibly similar to one used by ICI, intended to be used across the AMC company, Norton, Matchless/ AJS, James and Francis Barnet. It was data hungry, slow and unresponsive to the immediate needs of managers to control cash flow, stock and labour. Norton maintained its simpler faster system, probably leading to its continued success. Because of its simplicity, staff across the “coal face” understood it without explanation so lead to more responsive reaction to problems as they emerged, improving Norton efficiency.

Matchless hid behind import duties until the General Agreement on Trade and Tariffs swept them aside in 1959. By this time Honda had well established products with excellent engineering and sold 500,000 a year of these in 1959, when it launched into the American market. The quantity and quality of Matchless machines didn’t bear comparison. Bill Cakebread and Alan Jones believe the AJS Matchless annual production to have been 20,000 PA and Bert Hopwood believed Norton to be 10,000.

Norton designed 250cc and 125cc light weight bikes with 90% commonality of parts but the AMC rejected the idea. This is sad as the maximum engine capacity for a provisional license was 250cc after 1962. This may have let Honda into the young market and this people would have progressed to Hondas larger machines rather than AMC. A similar fate befell the one piece engine design for the heavyweight 250cc.

AMC was in fact five companies striving to produce their own range of motor bikes in competition with each other. Honda was one company with superb management leadership producing one unified range of motor bikes. Attempts by AMC to introduce commonality of parts were not successful, like the decision to replace the Villiers engines in Frances Barnet and James with new inferior ones manufactured at Woolwich. The decision by AMC to create its own dealership network in the USA was a costly mistake; Norton simply used the Berliner distribution network used by Ducati to sell its machines with great success. The risk of sales but also profits was born by Berliner, so Norton made a small profit but increased production, reduced unit costs and ironed out seasonal fluctuations in the UK market.

Honda was re-investing its substantial profits in the business while Matchless took profits that didn’t really exist, without investing in modernisation. Matchless had investors, creditors and banks to satisfy, Honda didn’t. During the post war recovery period, Japanese manufacturers were typically investing 30% of profits into its industry.

AMC, with its head office at Woolwich, used profits from Norton and Francis Barnet to bolster the flagging fortunes of AJS/ Matchless. In 1961 Norton was doing well with sales, particularly in the USA. It needed to expand production so was just about to buy a nearby factory, when AMC called in the £250,000 profit to cover a financial crisis at Woolwich. The Norton expansion did not take place and the potential profits from expanded production were forgone. This may have saved the AMC organisation had the right decisions been made.

The Japanese culture of looking after the workforce and massive industrial investment supported by a caring banking sector reaped its own success. In the 60s the Wilson Government tried to encourage replication of this model in the UK but was let down by a lack of desire to bring about a co-ordination with industry by the investment sector. And industrial leaders alike. A closer relationship between bankers and the industry would have revealed that the Norton financial control mechanisms and innovative bike and production design were head and shoulders above Matchless. Appropriate remedial action could have been taken much earlier.

With the failure of the manufacturing base at Woolwich and other Thames-side quality lead to the total destruction of the working class aristocracy that had given such stability and prosperity to East and South East London. The skilled young men emigrated to the old Commonwealth and elsewhere allowing prosperity to develop in those countries.

Conclusions

• AMC bought Norton in 1954 because of its wining habit in TT races.• The take over seemed to have stultified Norton machine, production and marketing innovation.• The Norton advertising advantage wasn’t pressed home across the whole of AMC• Profits from James mc, Francis Barnet mc, and Norton mc were used to bolster AJS/Matchless less than sparkling performance.• The Norton subsidiary couldn’t borrow money from banks because of the AMC group’s poor credit rating.• Norton’s innovative one piece engine designs for its 125cc and 250cc with 90% commonality of parts, reduced oil leaks and production costs.• The Honda advertising slogan “you are never alone on a Honda” lead their marketing campaign to sell machines to non motor cyclists who simply wanted to get to work. Freedom from oil leaks allowed this as people could keep clean without specialist clothes.• Norton survived beyond the AMC collapse, and went on to develop a 160 MPH machine loved by police forces for their speed and safety. But the investment money wasn’t there to develop it.

4 comments:

jon smith
said...

This is a brilliant analysis, I only just found it. My first bike was an old 1967 Francis Barnett Cruiser with the Villiers 4T engine. It was comparable with the jap 2 strokes of the same period and with addition of a seperate oil pump could have been competitive.

I remember when doing a de-coke on my AJS CSR in 1965 going to the local dealer - Pinks of Harrow to buy a new head gasket (a composite type). The store man bought out the last 3 he had and they were all different, with none of the holes for the studs lining up. So, not to be put off, I got a friend to run me and 1 of my cylinder heads down to Plumstead on the pillion of his new 305cc Honda ! Arriving at the factory stores counter a very helpful store man disappeared with the cylinder head into the depths of the factory for about 30 minutes trying to find a match. Unfortunately he was unsuccessful and this very sadly just illustrated what their quality control was like but the attitude of their workforce was good.

Yes..the story of the slow decline of Associated Motorcycles is a sad one...I have owned a number of AMC machines and currently have two Matchless heavyweight 350s and an AJS of the same capacity and type...I have also owned a fair number of Italian, Japanese and East German bikes and so have been able to compare the various merits of all of them...

The Japanese approach to Motorcycle building was very different to that of the main British bike builders as we all know - for example you would never get three coats of stove enamelling baked at 420 deg F on a Japanese machine, or beautiful hand welding, or beautiful Chromium plating over copper and nickel coats, or indestructible forgings and quality alloy castings that could survive no end of winter weather and road salt...

The Japanese compromised all of these areas of quality to give us machines that would only last for 3 or 4 seasons max and then only if they had been maintained meticulously by trained dealers at great expense and with specialist tools..

The Japanese did not want you to actually keep their machines for years and years...they hoped you would throw them away in a few years and then buy another new model...great for them but very bad for the environment and your finances...it wasn't so much a consumer 'Durable' but a consumer 'Disposable'....

The virtues of AMC machines are many - not only the tremendous quality and sturdiness of construction but also riding pleasure and of ownership pleasure - the extraordinary ability of the machines to last and give decade after decade of service is something that would be valuable today - I would suggest we now need to turn away from the Japanese approach of disposability and again revisit quality and durability for the sake of the environment - it takes a lot of energy and creates a lot of pollution to manufacture a vehicle - when that energy has been expended we need to get the most from the item - the 'Scrappage' concept was generated supposedly for the sake of the environment - in fact it was very bad for the environment....

The Royal Enfield 'Bullet' example gives the lie to the myth that British bikes no longer had a market and that the British approach was all wrong and the Japanese all right - with the right kind of marketing and intelligent foresight and planning AMC could have maintained a market - particularly in emerging markets in developing countries - charmingly old 'Brit' bikes are still cherished in India, Taiwan, Thailand and so on for their rugged simplicity and their ability to last forever...

I was in Greenwich yesterday, having driven down from Yorkshire.The place is a ghetto from the third world. Hardly anyone spoke English, or appeared to come from anywhere this side of Europe. The amount of rubbish, dog-dirt and dereliction was unbelievable.There was a free ferry to take my BMW across the Thames, but it was "broken" on return at 7:00pm so I had to take the nearby Blackwall Tunnel.So easy to put rose-tints on when you try and remember the motorbikes of your youth. I had a Bantam D7, followed by a Thunderbird 6T.Both were complete relics, using technology from the 1930s. The Bantam more modern than the 6T thanks to designs stolen from DKW.I discovered Japanese bikes in the 1970s and it was like the space shuttle had landed in the Stone Age. British machines were total rubbish.I tried a 1975 Bonneville recently and was amazed at how poor it was. Much worse than I remembered. Yesterday's hot potato seems clap cold today.